The so-called Volcker Rule, which is Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, is meant to restrict big U.S. banks from making risky speculative bets with funds from their own accounts through proprietary trading. The intent was to keep banks from the kind of hedging that puts customers in danger, helping to prevent another crisis like the one that brought the American economy to its knees in 2008.

The rule was initially scheduled for implementation in July 2010, but was repeatedly delayed. It is colloquially named for the economist who came up with it: former Federal Reserve Chair Paul Volcker, who led the economic recovery advisory board President Barack Obama assembled in 2009.

There have been successful lawsuits seeking to change the initial proposal over the past few years -- as well as the requisite slew of media reports about bankers anxiously anticipating the rule’s implementation. But now, as the New York Timesreports, the rule “was greeted with a shrug.” Many of the banks to be governed under the rule, including Bank of America, Citigroup, and Goldman Sachs, have killed off a number of practices that may fall under its restrictions, including their proprietary trading (“prop desk,” in Wall Street speak) operations. Goldman’s prop desk went to the P.E. firm KKR in 2010.

The Financial Timesreported this week that the rule’s arrival has led many banks to quickly sell off certain securities, such as CLOs (Collateralized Loan Obligations), which cull together high-risk corporate loans and would constitute a violation of the rule if they were obtained after January 2014.

As the Times points out, there is still widespread uncertainty about exactly how the Volcker Rule will be enforced. Banks may sound blas? and unconcerned for the moment, but come later this summer, regulators will begin the first audits for compliance.

]]>http://fortune.com/2015/07/22/volcker-rule/feed/0Paul A. Volcker 1985DBRParents are shelling out more money for kids to attend collegehttp://fortune.com/2015/07/21/parents-college-funding/
http://fortune.com/2015/07/21/parents-college-funding/#commentsTue, 21 Jul 2015 18:54:08 +0000http://fortune.com/?p=1215962]]>Parents opened their wallets more generously in the 2014-2015 school year, a report shows, reclaiming their place as the primary source of college funding for the first time since 2010.

Parental income and savings now cover 32% of college costs, surpassing scholarships and grants as the largest share of college funding, according to the How American Pays for College 2015 survey, released by Sallie Mae. The percentage of college funding contributed by parents’ savings and income had hovered at and below 30% since it nosedived from 37% in 2010.

Parents are paying more for college in part because it’s costing more. The amount that families spent on college rose to an average of $24,164 this year -- a 16% gain from $20,882 in 2014.

But the increased wallet-opening isn’t just linked to rising tuition. Parents are less worried about a volatile economy impacting their ability to pay for college. Only 17% of parents reported extreme concern that losing a job would impact their income, compared to 23% in 2014. In 2015, 62% of families eliminated potential colleges because of the cost, down from 68% in 2014 and the lowest percentage since 2009. The financial worries of parents -- which were at record levels in 2010 as loan rates rose and the value of savings diminished -- had eased significantly by 2015. Whereas a quarter of parents in 2010 recorded “extreme worry” about college costs because they were concerned about the value of their homes, only 6% said the same in 2015.

In addition to parental income and savings, 30% of college funding, on average, came from grants and scholarships in 2015, while 16% came from student borrowing, 11% from student income and savings, 6% from parental borrowing, and 5% from friends and family.

Despite the widespread coverage of student loan burdens, the majority of families did not take out loans to pay for college. When they did, the students were the ones who signed the dotted line three-quarters of the time. Families with students enrolled at private four-year colleges were far more likely to borrow (with 56% taking out loans) than those in four-year, or two-year public schools, where 43% and 22% of families took out loans, respectively.

]]>http://fortune.com/2015/07/21/parents-college-funding/feed/0Proposed Budget Cuts Threaten Funding For California UniversitiesclairegrodenMore children are living in poverty than before the recessionhttp://fortune.com/2015/07/21/child-poverty/
http://fortune.com/2015/07/21/child-poverty/#commentsTue, 21 Jul 2015 13:02:38 +0000http://fortune.com/?p=1215391]]>According to a new report from the Annie E. Casey Foundation, the economic recovery seems to be leaving one group in particular behind: children.

22% of American children, or more than 16 million kids, were living in poverty as of 2013, according to the report. Before the recession, in 2008, 18% of children lived in poverty.

Nearly a third of children in 2013 lived in a household where no parent had a steady, full-time job, according to the report, which was released Tuesday. That statistic is also higher than pre-recession levels, when 27% of children lived in households without job security.

The data book highlighted the racial disparities in children’s well-being across the country. “On nearly all of the measures that we track, African-American, American Indian and Latino children continued to experience negative outcomes at rates that were higher than the national average,” the report said. 39% of African American and 37% of American Indian children live in poverty, compared to 14% of Non-Hispanic White and Asian and Pacific Islander children.

Still, there’s reason for optimism. 2013 marked the first year that the statistic had declined at all since 2008. “When the data for 2014 are available, we assume that they will show some improvement,” the report, called the Kids Count Data Book, said. The report also showed improvements in almost all of its health and education metrics. More students were proficient in math at the elementary and middle school levels. (Though the proficiency rates were still a dismal 34%.) An all-time high of 81% of high school students graduated on time in 2012. The number of children without health insurance dropped three percentage points, probably thanks to the Affordable Care Act. And fewer teens were abusing drugs and alcohol.

The report also broke down child well-being by state, finding that children in Louisiana, New Mexico and Mississippi fared worst across metrics, ranking highest in the country for the number of teens neither working nor in school and the number of children living in households without job security. Minnesota, New Hampshire and Massachusetts ranked the best.

]]>http://fortune.com/2015/07/21/child-poverty/feed/0Utica, NY Struggles With Poverty Rate Twice The National AverageclairegrodenWhy Gen Xers are saving more for retirement than boomershttp://fortune.com/2015/06/23/gen-x-retirement-savings/
http://fortune.com/2015/06/23/gen-x-retirement-savings/#commentsTue, 23 Jun 2015 16:05:59 +0000http://fortune.com/?p=1189835]]>If the Great Recession had any positive result at all, it's this: Watching the world's economy stumble, and entire industries crumble, has inspired most people to get serious about socking money away for retirement, instead of putting off saving or leaving it to chance.

"One outcome of the Great Recession is that we're seeing meaningful changes in financial behavior, especially in the Gen X age group," says Celandra Deane-Bess, senior wealth planner for PNC Wealth Management and chair of PNC's national retirement practice. Her team recently surveyed 1,017 U.S. adults with investable assets of at least $50,000 and found that "the recession was a game changer. One of the hardest things is getting people to change their habits, but there has been a real shift in both spending and saving."

Gen Xers, defined as people ages 35 to 49, are markedly more likely to be putting more of their current income aside for later than are Baby Boomers, partly because the younger cohort is more scared of running out of money in their golden years. Almost three-quarters (73%) of Gen Xers polled agreed with the statement, "I worry that my savings may not hold out for as long as I live," while only 55% of Boomers agreed.

That worry is well-founded, partly because Gen X entered the workforce just as defined-contribution plans, especially 401(k)s, were replacing the old defined-benefit pension plans, which have all but vanished. So Boomers may get a smaller payout than they'd be due if the old plans had continued, but at least they're likely to get something. Partly as a result, 45% of Boomers, vs. 65% of Gen X, agree that "I believe I am solely responsible for my own retirement (no Social Security, employer pension, inheritance, etc.)."

Presidential candidates, take note: The merest hint of any intention to slash Social Security is, now as ever, unlikely to win many votes. Even though Gen Xers seem uneasy about counting on it, 94% of both age groups say they expect those monthly checks to be there when they retire.

Both Gen Xers and Boomers cite health care costs as their biggest retirement worry, and they may be right. "Health care reform has slowed the rate of growth in costs," notes Deane-Bess. "But those costs are still growing at a faster rate than inflation. Then too, life expectancy is increasing, and the longer you live, the bigger the share of your budget that will have to go to health care."

That's one reason Deane-Bess is skeptical of Gen Xers' intention to retire somewhat earlier (age 63, on average) than Boomers, who mostly plan to hold out until at least age 65. Slightly more than half (51%) of Gen Xers are spending less and saving more than before the downturn, vs. 37% of Boomers who say the same.

Will that behavior continue once the shock of the Great Recession has worn off? Deane-Bess believes it will. The economy went into a tailspin just as many Gen Xers were moving into the prime years of their careers, and "they were young enough that it made a lasting impression. They now see firsthand what it's like to lose a job, or a home, or both," she says. "Fear of the unknown is one thing, but fear of the known is even more powerful."

]]>http://fortune.com/2015/06/23/gen-x-retirement-savings/feed/0US DollarsAnnieRussia’s futuristic arms buildup is totally tankinghttp://fortune.com/2015/06/12/russia-armata-tank-military-recession/
http://fortune.com/2015/06/12/russia-armata-tank-military-recession/#commentsFri, 12 Jun 2015 13:44:23 +0000http://fortune.com/?p=1173184]]>The Russian economy may have stabilized in 2015, benefitting from the devaluation of the ruble and the stabilization of oil prices. But it’s certainly not strong enough to satisfy all of Russian President Vladimir Putin’s ambitions.

According to the Associated Press, the Russian military’s $400 billion modernization effort–which includes the construction of thousands of futuristic “Armata” tanks, among other initiatives–is coming under pressure after falling oil prices and Western sanctions have taken a huge bite out of government revenues.

The tanks, which Russian officials claim are 15-20 years ahead of Western designs, include a remote control turret, and is “as pleasant and easy to drive as a modern SUV.” Russian military planners also hope that in the near future, the tank “evolves into a fully robotic vehicle that could operate autonomously on the battlefield,” according to the AP.

But even as Putin recently increased his country’s military budget by 33% in order to help fund the modernization effort, analysts have said that it is inevitable that he will have to reverse that decision and spend less on the military as the Russian economy is expected to continue to contract through the end of next year.

]]>http://fortune.com/2015/06/12/russia-armata-tank-military-recession/feed/0RUSSIA-HISTORY-WWII-PARADE-REHEARSALchristopherrmatthewsMost Americans say wealth inequality is a huge issuehttp://fortune.com/2015/06/04/wealth-inequality-poll/
http://fortune.com/2015/06/04/wealth-inequality-poll/#commentsThu, 04 Jun 2015 13:43:48 +0000http://fortune.com/?p=1159032]]>An improving economy has done little to distract Americans from an issue sure to be a the forefront of the 2016 presidential contest: inequality.

A new poll by The New York Times and CBS News found that a majority of respondents--66%--said wealth should be more evenly distributed. 67% percent of respondents said the gap between the rich and the poor was getting larger, and 65% said the divide needs to be addressed now.

A smaller chunk of respondents--57%--said the government should do more to close the gap between rich and poor, though they split sharply along partisan lines with one-third of Republicans supporting a more active government role, versus eight in 10 Democrats, according to the Times. When asked if they wanted to raise taxes on Americans who earn more than $1 million, 68% said they were in favor of such hikes.

Democrats are trying to capitalize on Americans’ belief that the economic recovery has been uneven, benefiting high-earners the most. But inequality is far from a partisan issue. The Times reports inequality is a concern for almost half of Republicans and two-thirds of independents, which suggests it’s an issue that will persist through and beyond this election cycle. Considering these findings, it’s no surprise that both Democratic and Republican politicians are exercising their populist muscles.

]]>http://fortune.com/2015/06/04/wealth-inequality-poll/feed/0Voting BoothclairezillmanWhat recovery? The U.S. economy shrunk in the first quarterhttp://fortune.com/2015/05/29/gdp-economy-shrinks/
http://fortune.com/2015/05/29/gdp-economy-shrinks/#commentsFri, 29 May 2015 13:20:51 +0000http://fortune.com/?p=1142393]]>U.S. Economy-watchers are suffering from a feeling of deja-vu Friday morning, as the Commerce Department announced that the U.S. economy shrank by 0.7% in the first quarter of 2015, revising down their initial estimate that the economy grew by 0.2%. This mirrors the first quarter of 2014, when economists were surprised to find the economy shrank by a whopping 2.1%.

The major difference between the initial reading last month and today’s estimate was news that the trade deficit increased in March by the largest amount since since 1999. The biggest contributor to this deficit was trade with China, where America’s bilateral trade-gap reached an all-time high.

The numbers in the U.S. mirror those of economies thought to be in more trouble, like Greece, where data confirm the nation has once again slipped back into recession. Same for Brazil, where the economy contracted by 0.2% in the first quarter, though this reading was better than economists had expected. It contrasts sharply with the Indian economy–now the fastest growing large economy in the world, which grew at 7.5% clip in the first quarter.

Most economists expect the economy to bounce back from this setback, just as it had last year. After the GDP decline in the first quarter of 2014, the economy recovered in a big way, growing 4.6% and 5.0% in the second and third quarters respectively. Jim O’Sullivan, Chief U.S. Economist with High Frequency Economics argued in a research note to clients, that other data–like strong job growth and tame jobless claims–bolster the theory that the first quarter numbers is just a bump in the road to overall healthy growth in 2015.

Fed Chair Janet Yellen agrees with this assessment. In a speech last week, she argued the first quarter slow-down was due to “transitory factors,” like, “the unusually cold and snowy winter and the labor disputes at ports on the West Coast which likely disrupted economic activity.”

Other analysts aren’t so sure. Jim Bianco of Bianco Research has wondered, given steadily weakening GDP numbers, a depressed energy market, and weak retail sales, that we should be skeptical of positive employment numbers rather than the GDP reading. Says Bianco, “We suspect something might be amiss with the payroll numbers. These numbers are telling us a far different narrative [than] most other economic data.”

]]>http://fortune.com/2015/05/29/gdp-economy-shrinks/feed/0U.S. Oil Workers Threaten To Expand Strike To California PortchristopherrmatthewsIs the Verizon-AOL merger a sign of an overheating economy?http://fortune.com/2015/05/12/verizon-aol-ma-deals/
http://fortune.com/2015/05/12/verizon-aol-ma-deals/#commentsTue, 12 May 2015 19:19:17 +0000http://fortune.com/?p=1118353]]>The announcement that Verizon is buying AOL has the financial media buzzing more for what it says about the future of the media and telecom businesses than for the pure size of the deal.

After all, as my colleague Geoff Smith noted this morning, the $4.4 billion Verizon VZ is paying for AOL AOL amounts to “loose change” for the nation’s largest wireless provider.

At the same time, it does offer the opportunity to check in on the M&A market in 2015, which has been active and looks like it will heat up even more as the year goes on.

According to Dealogic, the total volume of global mergers and acquisition volume came in at roughly $3.5 trillion in 2014 — beating the 2013 totals by a healthy 26%. Total deal volumes in 2015 are at $1.4 trillion including Verizon’s acquisition of AOL. That’s the fastest pace we’ve seen since 2007, and if the wheeling and dealing keeps up at this rate, the total number of deals could outstrip every year on record other than 2007.

There are several reasons for the boom. Stock markets are getting pricey, giving executives plenty of firepower to finalize deals. At the same time, interest rates are at record lows, making deals like Verizon’s–which was funded with commercial paper–relatively inexpensive. Meanwhile, corporate executives are facing slow-growing markets in the rich world, with apparently few opportunities to invest in their own operations to create shareholder value. So, the next best option is to buy someone else’s operations.

Whether or not you agree with this particular management strategy, examining the M&A cycle can tell us something about the economy in general. Take a look at this chart from Generational Equity, which shows the M&A cycle going back to 1980:

M&A activity tends to peak in the year or two before the economy contracts (recessions are indicated by the shaded areas in the chart). Given that 2015 deal volume is on pace to surpass 2014 figures by about 11%, one might get worried that M&A levels are reaching a danger zone, signaling a coming stock market bubble and possible recession.

But another point to take from the above chart is that M&A volumes have surpassed previous peaks before each of the past three recessions. It still doesn’t appear as if M&A is on pace to surpass the 2007 record of $4.6 trillion in deals. Of course that may change, with big deals rumored, like the $40 billion hostile offer that pharmaceutical firm Teva made to Mylan (which is in turn offering nearly $30 billion for Perrigo) last month. But for the time being, it looks like the M&A market has a few more years to ramp up before the next recession. That’s good news, considering our current economic expansion is one of the longest running on record. But it pays to keep track of these trends, as it may just help you spot the next serious downturn.

]]>http://fortune.com/2015/05/12/verizon-aol-ma-deals/feed/0Verizon AOL splitchristopherrmatthewsScreen Shot 2015-05-12 at 2.10.35 PMWhy the U.S. may be headed for a recession, in one charthttp://fortune.com/2015/05/06/us-recession/
http://fortune.com/2015/05/06/us-recession/#commentsWed, 06 May 2015 21:04:43 +0000http://fortune.com/?p=1110678]]>It’s been a pretty miserable couple of weeks for the U.S. economy.

Last week, the Commerce Department announced that GDP growth in the first quarter of 2015 fell dramatically to 0.2% on an annualized basis. But after new data released Tuesday showed that the trade deficit in March was far higher than economists had expected, it’s likely that GDP in the first quarter actually shrank.

For now, most economists expect that the economy will bounce back in the second quarter of 2015, just like it did last year, and that overall real growth will beat last year’s performance of 2.4%.

But a new analysis from Jodi Gunzberg, global head of commodities at S&P Dow Jones Indices, argues against this consensus, and instead makes the case that we’re headed for another recession.

Gunzberg points to the outstanding performance of commodities in April as measured by the S&P GSCI index, which gained 11.1% that month, the 19th best month since the index first starting tracking these commodities back in 1970. Two groups of commodities–energy and industrial metals–did particularly well, rising by a combined 12.67% in April. It’s not common for these two groups of commodities to surge in value at the same time. According to Gunzberg, the two indices have only moved in tandem about 30% of the time since 1983. And there have only been 12 months in which the energy and industrial metals sectors have risen more than they did in April:

As you can see, the months in which these sectors did well are clustered around times leading up to a recession. Gunzberg argues that this is because firms that rely on these materials--like oil and natural gas in the energy sector, and copper and aluminum in the metals sector--start buying up these materials in bulk when they sense their performance is about to start waning. “When you look at broad economic cycles,” says Gunzberg “equities lead the cycle, while commodities are on the cycle.”

In other words, as the market nears a top, and companies are flush with cash and capital, but short on faith in their future performance, they start to hoard the basic commodities that power the global economy. But eventually their performance takes a turn for the worse, and so does demand for raw materials.

Of course, Gunzberg’s data goes back by just 30 years, and it predicts only three recessions. It’s possible that these data only point to strange coincidences rather than something with real predictive power. But with the U.S. in its 70th month of economic expansion–the sixth longest the U.S. economy has had since 1850–the slowdown in the first quarter may very well be more than just a blip.

]]>http://fortune.com/2015/05/06/us-recession/feed/0Inside RTB Bor Copper PlantchristopherrmatthewsScreen Shot 2015-05-06 at 4.22.56 PMSmall businesses are basically saving the job market right nowhttp://fortune.com/2015/02/27/small-business-jobs/
http://fortune.com/2015/02/27/small-business-jobs/#commentsFri, 27 Feb 2015 16:46:53 +0000http://fortune.com/?p=1009173]]>There’s been a surge in post-recession small business hiring across the country, according to a new report from ADP Research Institute.

Companies with 499 employees or less accounted for 81% of new private-sector positions in January, ADP says. Expand out the time frame, and small businesses averaged 83% of new jobs in the last four months. For comparison’s sake, small businesses were only responsible for 38% of new private-sector jobs back in September 2010.

What explains the small business hiring boom? Jim O'Sullivan, chief U.S. economist at High Frequency Economics, told Bloomberg that startups have been benefitting from easier access to capital. “In general, small businesses were hurt more by the credit crunch than big firms and that headwind for the recovery has become a tailwind as the banking sector has strengthened and eased lending standards,” O’Sullivan told Bloomberg.

The recent small business blitz comes as startup owners reported their highest optimism levels in eight years last month.

]]>http://fortune.com/2015/02/27/small-business-jobs/feed/0open small businesssnyderfortuneUnemployed executives finally catch a breakhttp://fortune.com/2015/02/03/unemployed-executives-job-search/
http://fortune.com/2015/02/03/unemployed-executives-job-search/#commentsTue, 03 Feb 2015 18:36:30 +0000http://fortune.com/?p=973572]]>The so-called jobless recovery has been especially tough on people who lost senior management positions in the wake of the downturn and who then, in a classic Catch-22, found that employers wouldn't interview them because they were unemployed.

"For the past five years, companies only wanted to meet with candidates who were already working," notes Sally Stetson, a principal at executive recruiters Salveson Stetson Group. "Now, we're seeing the stigma of unemployment disappear. Employers are looking for the best talent they can find, even if someone has been 'in transition,' often through no fault of their own."

What's more, companies are offering out-of-work executives the same pay packages as their already employed peers, according to Salveson Stetson's latest study of the executive job market.

Although the recession technically ended in 2009, the bump in compensation that executives used to get when they changed jobs has been slow to return, the study says. Consider: The average senior manager who switched jobs in 2006 and 2007 saw his or her pay increase by an average of 25%. During the worst of the downturn, in 2008 and 2009, that plummeted to 11%. Now, the average increase has crept up to about 16%, still well below pre-recession levels.

There are two exceptions. Executives with experience managing global manufacturing operations command, on average, a 25% "open-market premium" when they jump to a different company. And senior human resources managers generally get offered compensation that is 20% higher than their current pay.

It's a straightforward case of supply and demand. International manufacturing expertise is scarce, the study notes, with lots of employers chasing a small pool of candidates. At the same time, HR has become a more complicated field that "demands a higher level of talent-management experience than in the past," says Stetson. "Candidates need to be able to manage across cultures, develop a Millennial workforce, and act as a strategic advisor to the CEO."

The job market for experienced senior managers overall is looking livelier than it has in years, she says. "When hiring was slow, everyone was hunkered down in their current jobs. But it's not unusual now for a strong candidate to get several offers, and people are restless," Stetson observes. "They're looking harder at their current role and wondering, 'Is this where I should be in my career? Am I learning? Is there something out there that might be better?'

"These are always good questions to ask," she adds. "But for a long time, no one was asking them."

]]>http://fortune.com/2015/02/03/unemployed-executives-job-search/feed/0young job applicant job interviewAnnieAmericans’ confidence in job market hits highest since recessionhttp://fortune.com/2014/12/22/americans-confidence-in-job-market-hits-highest-since-recession/
http://fortune.com/2014/12/22/americans-confidence-in-job-market-hits-highest-since-recession/#commentsMon, 22 Dec 2014 18:41:19 +0000http://fortune.com/?p=916967]]>This post is in partnership with Time. The article below was originally published at Time.com.

By Maya Rhodan, TIME

Americans today are as hopeful about finding a good job as they were before the recession, according to a new survey.

In December, 36% of Americans said they felt now is the right time to find a good quality job--up from 30% last month, a new Gallup poll reports. The last time Americans' job outlook stood at this level was back in November 2007, when 38% of Americans were confident they could find a good job.

Americans' job quality outlook has generally remained low throughout the recession, dipping to as low as 8% several times since 2009. The marked change in respondents' outlook in the recent poll seems to indicate an overall increase in confidence in the U.S. job market, which has improved over the past year.

So far in 2014, the U.S. added over 2 million jobs, the most since the 1990s. In October and November, U.S. employment remained under 6%.

The Gallup poll results are based on a survey of 805 adults. It has a margin of error of plus or minus 4 percentage points.

Then the price of oil--the commodity upon which the Russian economy is built--began to fall sharply, draining the nation’s economy of foreign money and crimping its growth. This dynamic drove the ruble sharply lower, culminating in an 11% drop on Monday, which forced Russia’s central bank to raise interest rates by a whopping 650 basis points, all but assuring a deep and painful recession in 2015.

But with strict sanctions in place against Russian companies--in response to Russia’s annexation of Crimea and hostilities with Ukraine earlier this year--and the continuous fall in oil prices, the interest rate hike did not satisfy traders, who sent the the ruble tumbling another 8% following the announcement.

The fall of the ruble has been swift and devastating. Carl Weinberg, chief economist at High Frequency Economics, referred to the currency’s plummet as “an unrecoverable spiral” in a note to clients on Tuesday. He argues that what we are seeing now is a classic “currency collapse,” brought on by both economic factors like sanctions and falling oil prices as well as financial factors like the Russian central bank printing money to help state-owned oil company Rosneft cover its debt denominated in foreign currencies.

What makes the situation in Russia that much worse is that the nation’s companies, both private and state-owned, hold $670 billion in debt denominated in foreign currencies. This debt is about one-third the size of the entire Russian economy, and it will become impossible for Russian companies to service it if the ruble continues to fall. Writes Weinberg:

The amount of rubles local borrowers have to give up to pay off foreign debt obligations just increased by 20 percent overnight, by 50 percent since the start of this month, and by 90% since the start of November…. The effective interest rate on foreign borrowing for Russians is over 6000%, enough to kill any economy.

Normally, when countries find themselves in a situation like Russia’s, they turn to the IMF, which would provide funding and debt restructuring in exchange for the enactment of economic reforms. But as University of Oregon economist Tim Duy writes, it’s tough to see either the IMF swooping in to help an international pariah like Russia or Vladimir Putin submitting to any reforms imposed by the West.

So, how will Russia’s currency crisis affect the U.S.? It’s tough to say for sure. A recession in Russia won’t have much of an effect on the American economy, as the two nations conduct very little trade with each other. But make no mistake, the crisis in Russia today is at least partially a result of the diplomatic policies of the United States. We are seeing the kind of economic misery the U.S. and Europe aimed to inflict on Russia as a result of its aggression in Ukraine.

The question now is whether the economic pain will convince Russia to back down, or double down, in Eastern Europe. Weinberg, for one, worries that Putin will instruct Russian companies to renege on their foreign obligations. This could spell bad news for banks and investors across Europe and the U.S. that have loaned money to Russian companies, and it could allow Russia’s financial instability to infect other emerging markets and the already shaky E.U. economy.

On Friday, the Labor Department reported that job growth surged in November. In the past 11 months, U.S. employers have added nearly 2.7 million jobs. That’s the fastest job growth we’ve had since 1999, a year in which the economy was truly robust, but also inching closer to a plunge.

So, is the economy as good as it was in 1999? Not quite.

Yes, employers have added more jobs in 2014 than what they added for the entirety of 2005--the next biggest year for job growth--but we are still a long way away from matching 1999. Back then, the economy was adding 262,000 jobs a month. Today’s average is 240,000. Put another way, employers would still need to add another 527,000 jobs in 2014 to match 1999’s record, and we only have one month to do it (not factoring revisions). So, we’re likely to fall short.

Here are a few other ways to compare today’s economy to what we had in 1999.

At the end of 1999, the portion of the population that was working was the highest it had been at any time in the nation's history. Much of this had to do with demographic shifts: women had been steadily joining the workforce for a couple decades at that point. Meanwhile, not even the oldest baby boomers had reached retirement age.

Fast-forward to 2014, and the trend of more women joining the labor force looks to have come to a close. At the same time, the aging of the United States’ populace means that there are fewer working-age people as a percentage of the overall population. There's also evidence that a sinking labor participation rate is a sign that the U.S. economy has become less dynamic. The fact that labor force participation even for working-age Americans (25 to 54 years old) is at 80.8%, down from a high of 84.6% in 1999, suggests that the decline isn't only a product of an aging society.

The Stock Market

Stocks are up 12% this year. That’s pretty similar to 1999, when the market in the first 11 months was up 16%. But the big difference is how confident investors seemed back then that the market and, by extension, the economy would keep rising. How much more confident? The price-to-earnings ratio of the S&P 500 index is a pretty good measure of investor enthusiasm. Back in 1999, it was 59% higher than it is today.

GDP Growth

In 1999, U.S. GDP growth was steadily accelerating. This year, economic grow is up, but it has been choppy. (And, yes, we had bad weather in 1999. The Blizzard of 1999. Look it up.) For the first nine months of 2014, GDP growth averaged 2.1%. And it was lower in the third quarter than it was in the second. Back in 1999, the nine-month average GDP growth was a significantly higher 3.8%. And the growth in 1999 was a continuation of a trend that the economy had been experiencing for the past few years. GDP growth averaged 4.5% in both 1998 and 1997. These days, five years since the recession, we are only now pulling out of our growth slump. Last year, GDP growth was a meager 2.2%. That makes this year’s gains off of that lower hurdle less impressive.

Wages

Perhaps the single biggest difference between the economy of today and that of the late 1990s comes down to wage growth. While wages grew 0.4% over last month, double what economists were expecting, they have barely grown in real terms over the past year. That's a far cry from what we saw from 1995 to 2000, when a very tight labor market led employers to give generous raises, which in turn led to increases in average worker pay by 2.4% every year, above and beyond inflation.

]]>http://fortune.com/2014/12/05/us-economy-growth-1999-vs-2014/feed/0Prince Live At The Forum 1985christopherrmatthewsUS Labor Force Participation Rate Chartprice-earning-1999-20142014 vs 1999 gdpFull-time workers, rejoice! Jobs are coming backhttp://fortune.com/2014/12/05/full-time-workers/
http://fortune.com/2014/12/05/full-time-workers/#commentsFri, 05 Dec 2014 17:24:20 +0000http://fortune.com/?p=892970]]>November was a great month for job gains. The U.S. economy added 312,000 workers, well beyond the 230,000 economists were expecting. And 2014 has been the best year for job gains this millennium.

More jobs in general is a positive, but economists and policy makers also care about the type of jobs being added to the economy. And there’s some good news on that front as well. Most of the new jobs added since late 2011 are full-time positions.

The overall number of part-time workers, defined as those working fewer than 35 hours a week, has remained consistent. Meanwhile, the population of workers with part-time positions for economic reasons--meaning, those workers who would prefer to have a full-time gig--has been trending downward over the past several years.

Wow. Chart of the report? Number of Americans working part-time--but wanting to work full time--is falling. pic.twitter.com/U2QslHHWe2

November was a standout month, with a string of gains. The news has met much of the Federal Reserve’s expectations of a gradually improving labor market, though Janet Yellen and her team will surely be watching carefully to make sure this trend continues into 2015.

]]>http://fortune.com/2014/12/05/full-time-workers/feed/0Employers Post Most Job Openings In Four Years In JunelorenzettifortuneFrom the archives: Holiday shopping in 1930 looked a lot like todayhttp://fortune.com/2014/11/30/from-the-archives-holiday-shopping-in-1930-looked-a-lot-like-today/
http://fortune.com/2014/11/30/from-the-archives-holiday-shopping-in-1930-looked-a-lot-like-today/#commentsMon, 01 Dec 2014 01:00:55 +0000http://fortune.com/?p=881004]]>Holiday shopping has been an all-American tradition since about the end of the 19th century. The exact start is difficult to pin down, but generally followed the rise of store-sponsored Thanksgiving parades. The moment Santa Claus came gliding down the street was the official beginning of the holiday shopping season.

The most famous parade still graces televisions nationwide: the Macy’s Thanksgiving Day parade. It started in 1924, not long before the nation’s deepest and longest-lasting depression.

The market crashed on Oct. 28, 1929–what would come to be called Black Monday. The shopping season was only weeks away and no one was yet aware that the U.S. was sliding into the Great Depression, as Fortune chronicled.

Even in the mad winter of 1929, above the dying bellows of the Bull Market, could be heard sleigh bells and the quaintly anachronistic “Merry Christmas to all, and to all a good night.” Santa Claus managed by his very madness to divert attention from the carnage in Wall Street for a little while, and by that much enabled the U. S. citizen to throw up philosophical bulwarks against the the bad times that were advancing on him.

Retail wouldn’t feel the full effects of the market crash until the following year, 1930.

But any department store manager who thought that he had already weathered the storm soon found the seriousness of his miscalculation. Unemployment first, and then curtailment of pay rolls during the months that followed, slowly but surely reacted upon his trade. The graph of his sales, unless his store was in a singularly fortunate bailiwick, gradually dropped downward. Not even normal seasonal upward movements were followed. In August, sales were off 9 per cent from 1929’s August record, and the average for the year’s first seven months (despite, on the whole, remarkable steadiness during the late winter period) was off 6 per cent. Thus did the department store, always a laggard in reflecting business conditions, at length show what had already been shown in other divisions of business and trade.

The solution? More spending, according to businessmen and economists.

The needed thing, all agreed, was an acceleration of spending. An increase of $267,000,000 in savings deposits throughout the U. S. between June 30, 1929-June 30, 1930 indicated that even with lessened income people were setting aside greater liquid reserves--a hesitancy to spend which accelerated the forces making for reduced business activity. If these reserves could be released, if goods could be started moving at a more rapid rate, if shelves could be depleted, then the wheels of production could be started revolving, idle men and idle capital put to work, and the tide turned. Philadelphia began a determined “Buy Now” campaign and exhorted the rest of Pennsylvania to follow suit so that that state could come out of the slump first.

The storyline sounds familiar to the more recent Great Recession, though the consumption numbers 84 years ago paled compared to today. Shoppers were expected to snap up $6 billion worth of goods–$17.3 billion in today’s dollars. That’s a fraction of the nearly $617 billion American buyers will spend this year, according to the National Retail Federation.

Nevertheless, some things don’t change all that much, especially an American tradition like the Macy’s parade.

Each year in Manhattan, R. H. Macy & Co. does him honor with a parade of Gargantuan balloons, designed by Tony Sarg and constructed by Goodyear. The parade comes down Broadway on Thanksgiving Day, and in 1929 consisted of ten balloons representing the Katzenjammer family of comic supplement fame, plus a dragon 177 feet long, a dog, a turkey, and a horse and rider. All of the balloons with the exception of the dog were inflated with helium (of which gas R. H. Macy & Co., by virtue of this annual parade, is the largest commercial user in the U. S. except for companies actually operating airships) and were released after their march at the entrance of Macy’s store. To each was attached an offer of $100 reward for return.

]]>http://fortune.com/2014/11/30/from-the-archives-holiday-shopping-in-1930-looked-a-lot-like-today/feed/0lorenzettifortuneU.S. economy is improving, just in time for the holiday shopping seasonhttp://fortune.com/2014/11/26/us-economy-holiday-shopping/
http://fortune.com/2014/11/26/us-economy-holiday-shopping/#commentsWed, 26 Nov 2014 18:31:56 +0000http://fortune.com/?p=881942]]>For Christmas this year, the U.S. might finally be given the sort of recovery we've all been waiting for.

Economists expect that following recessions, an economy should grow more quickly than than its long-term potential, so that growth eventually catches up to the pre-recession trend. Our most recent recovery, however, never lived up to this expectation, and the economy simply sputtered along rather than making up for lost time.

But Tuesday’s revision of GDP growth suggests the U.S. economy might finally be seeing the above-trend growth we've been waiting for. As Jim O'Sullivan of High Frequency Economics points out, other than in the first quarter of 2014, the economy has been growing at a 3.5% annual rate since the middle of last year. "We believe the trend in real growth is now at least 3 percent, and possibly even 3.5 percent. In any event, it’s above the potential growth rate, which is probably no more than 2 percent currently,” he writes.

There is some disappointing news packed into this analysis. As researchers at the Federal Reserve noted this week, the potential growth rate of the economy has most certainly been damaged by the financial crisis and subsequent recession, while many economists predict that the U.S. will grow slower in the coming years than the post World War II average simply because of the aging of the workforce and slowing population growth.

But if we are, in fact, growing above trend, that means the economy will be closer to reaching full employment--a necessary condition for rising wages.

And there are signs that this wage growth might be around the corner. While wage data in the monthly jobs report suggests that the average American’s pay is rising only fast enough to keep pace with inflation, Tuesday’s GDP numbers show private income rising at nearly twice that rate, likely because the Labor Department data leaves out income workers earn from sources like annual bonuses. Meanwhile, as the unemployment rate continues to fall, it’s expected that employers will have to respond to a tightening market by raising salaries.

And there’s reason for optimism beyond rising wages. Consumer confidence ticked down in November, but that was after a huge jump in October that placed the Conference Board’s index at a seven-year high. As Renaissance Macro’s Neil Dutta argues, the number of consumers expecting to buy a home has risen throughout the year, while the number expecting to buy major appliances is at its highest since 2010. This may have something to do with consistently declining gas prices. Since retail gas prices are 88 cents below their recent highs, Dutta argues that American consumers could end up saving a total of $119 billion over the next year, if prices stay this low.

With this price break coming just as the holiday shopping season ramps up, consumers might be willing to spend rather than save that money, giving an extra boost to the economy.

And finally, the housing market is showing signs of life. Tuesday’s Case-Shiller report demonstrated that while home price appreciation is continuing to slow, the trend is healthy. IHS Global Insights’ Patrick Newport called it a “good report,” arguing that the slowdown is due to added supply and fewer foreclosures rather than a weakening economy.

Meanwhile, the Census Department announced on Wednesday that new home sales increased 1.8% from last October, to an annual rate of 458,000 units. While this number is quite low by historical standards, the data show that the construction industry is continuing to recover, albeit slowly.

But economists believe that the main force holding back new sales and construction is simply the lack of household formation, which has yet to rebound in a significant way. But if wages begin to pick up in the final quarter of 2014 and next year, that could be a catalyst for young people to begin to move into their own homes, and for these data to recover to their pre-recession norms.

]]>http://fortune.com/2014/11/26/us-economy-holiday-shopping/feed/0Holiday Shoppers Seek Out Deals On Black FridaychristopherrmatthewsThe case for a global recession in 2015http://fortune.com/2014/10/28/global-recession-us-europe-china/
http://fortune.com/2014/10/28/global-recession-us-europe-china/#commentsTue, 28 Oct 2014 14:33:53 +0000http://fortune.com/?p=835600]]>Four years after the end of the Great Recession, it looks as if the U.S. economy might finally be poised for breakout growth.

Monthly job growth in 2014 is, on average, faster than at any point since the financial crisis. Overall economic growth appears to picking up too, with real GDP growing by more than 4% in the second quarter of this year, and many economists predicting higher overall growth compared to
last year.

But news outside the U.S. isn’t so bright. European economies are still battling depression-era levels of unemployment and the threat of deflation. And emerging economies, like China, are having trouble maintaining the kind of growth they have become accustomed to in recent years. The most recent readings out of China have the world’s second-largest economy growing at roughly 7.5% per year, down from the 10% growth it averaged for two decades before its economy began to slow in 2012. And this pattern holds for other emerging economies like Brazil and Russia.

Optimists hope that an accelerating U.S. economy will have what it takes to drag the rest of the world out of the doldrums, as it has done during so many past recoveries. But David Levy, economist and chairman of the Jerome Levy Forecasting Center, argues that the problems of the rest of the world will end up taking the U.S. down, rather than the other way around.

Levy is calling for a 65% chance that there will be a global recession by the end of 2015, based on the simple fact that emerging markets have continued to invest in an export infrastructure to sell goods to the West that it no longer has the wherewithal to buy.

Levy is an intellectual descendant of the economist Hyman Minsky, a heterodox thinker who spent many years working at the Jerome Levy Economic Institute and whose theories were largely ignored by economists up until the latest financial crisis. Once the crisis struck, however, Minsky’s ideas seemed to make a lot more sense. He argued that capitalist economies slowly and naturally become unstable over time, as banks and private businesses take on more and more debt, until the system finally snaps under the weight of these obligations. After surveying the wreckage caused by an over-leveraged banking system, which had gorged itself on debt backed by overvalued real estate, the economics world has begun to pay much closer to attention to Minsky and his views on financial instability.

Indeed, Minsky and his ideas have captured the attention of big-name figures like hedge fund titan Ray Dalio and economist and Financial Times columnist Martin Wolf, who began his latest book with a quote from Minsky arguing that economists ought to formulate theories in which depressions are a naturally occurring state for capitalist economies. These thinkers have been drawn to the Minksian notion that, over the long run, capitalist economies will inevitably suffer from the kind of trouble we’ve been in recently because capitalist systems encourage the growth of debt.

We hear a lot of people warning about the dangers of debt, specifically the government variety. But for Minksy and his followers, it’s private sector debt that is the problem. Here’s how economist Paul Krugman has described the Minskian concept of debt:

He argued that conventional views of financial crisis were too narrowly focused on the specific issue of bank runs. In Minsky's vision, excessive leverage--too much reliance on borrowed money--creates a risk of crisis whoever the borrower. Banks, which in effect borrow money short-term from their depositors but invest in assets that can't easily be converted to cash, may be especially vulnerable. But business and household debt also expose the economy to the possibility of a self-reinforcing downward spiral.

The following chart, provided by Levy, shows the accumulation of private debt in the U.S. and in China:

As you can see, debt in the U.S grew and grew until the trend was finally snapped in 2008. This process of “deleveraging” is beginning to end in America, but in places like China, the debt buildup hardly paused, and now the ratio of debt to GDP held by non-financial businesses in China is higher than it ever was in the U.S. So, what is this debt financing? Investment in businesses and real estate, to fund the great Chinese export machine. The problem is that exports haven’t grown in China to justify that demand, as the following chart shows:

You can see the same general trend for other emerging markets. They’ve continued to invest, hoping that the export growth catches up to pre-crisis levels. Eventually, the consequences of this overinvestment will be clear, just like the U.S. economy had to deal with its own over-investment in real estate.

So what happens when emerging markets are finally forced to face the music? It’s tough to say what a financial crisis in China would look like, Levy argues. The government in Beijing has the ability to take a much more activist role in protecting the financial system than even the U.S. did. But either way, the world’s second largest economy, and others like it, are headed toward much slower economic growth.

Twenty years ago, a recession across the emerging world might not have been a huge deal for the U.S., but the American economy is more reliant on global trade today than it has been in a long while. Thirty percent of the jobs added since the financial crisis has been the result of rising exports, according to the Treasury Department, and there are now more firms exporting goods and services in America than ever before.

The U.S. economy is even more closely connected to the European economy, which Levy also shows has done a poor job of deleveraging:

The European banking system never really recovered from the financial crisis. A stress test released on Sunday showed that 25 out of 130 institutions are unsound while critics argue that the failure rate should be far higher. Levy has little confidence that Europe will be able to withstand an economic shock stemming from the emerging economic world. And once Europe is dragged under, he says, there isn’t enough economic strength at home to keep the U.S. economy from avoiding another recession.

]]>http://fortune.com/2014/10/28/global-recession-us-europe-china/feed/0european stock marketchristopherrmatthewschina.us.debt.chartchina.exportseuro area debtWhy Germany is the Eurozone’s biggest free riderhttp://fortune.com/2014/10/22/why-germany-is-the-eurozones-biggest-free-rider/
http://fortune.com/2014/10/22/why-germany-is-the-eurozones-biggest-free-rider/#commentsWed, 22 Oct 2014 15:13:41 +0000http://fortune.com/?p=831304]]>As worries rise that the eurozone is slipping into recession, it’s clear Germany is doing way better than its neighbors. Today, the country has low unemployment, very low inflation, a large trade surplus and a balanced budget. By contrast, most members of the Eurozone are stagnating, while some are going through a catastrophic recession and suffering from debilitating unemployment. The German government says that its own success and its neighbors' failures are unrelated; that poor performance is due to poor decisions. Yet, even though the policy failures are real enough, this analysis is false.

Germany has for many years pursued a policy of wage suppression, which many economists have described as a competitive devaluation or 'beggar thy neighbor' policy. Germany's gains in competitiveness were immediately translated to gains in trade, since the freedom of goods, services, persons and capital allowed German products to circulate freely and quickly throughout the European Union. These are the fundamental freedoms of EU law and are vigorously protected by the European Court of Justice. German policy would not have been successful without them

Germany has also benefited from the fixed exchange rate that the Euro effectively secures between itself and its major European markets. This means that its export boom was not offset by a rise in its own currency. If Germany had been outside the Euro, currency appreciation would have hurt Germany's gains. Not so in the Eurozone.

While Germany has benefited so much from the Eurozone, its less successful partners are left to fend for themselves. The Eurozone lacks the automatic stabilizers that other currency unions apply among the various regions -- namely, fiscal transfers such as unemployment and housing benefits, shared health care costs, or the pooling of bank risks and deposit insurance. The Eurozone also lacks the large movement of workers across state borders enjoyed by the United States, mostly due to language and regulatory barriers. These institutional features of the Eurozone have created a highly unfair economic union, which magnifies disproportionately the consequences of failure.

Germany might respond, 'Tough, the others ought to have seen it coming." All members of the Eurozone are subject to the same competitive environment. All consented to its design by ratifying the relevant treaties. All had a chance to adjust. Yet this argument is false too.

Not everyone had the same chance to adjust. As I argue in my recent article for Foreign Affairs ('Misrule of the Few: How the Oligarchs Ruined Greece', ) membership in the European Union has not improved the institutions of the weaker members. It has actually made them worse.

When they joined the EU, Greece, Ireland, Portugal and Spain opened their borders and exposed themselves to new waves of trade, immigration and finance. Competition with other member states was meant to bring about 'creative destruction,' whereby inefficient firms - i.e. those who could not compete internationally - would go out of business. In order to avoid short-term hardships, the peripheral economies were set to receive large sums of EU funds by way of compensation. These funds were supposed to be invested in restructuring the domestic economies. But this happened very imperfectly.

The funds strengthened those who administered them. In the absence of a strong civil service in most of the peripheral EU members, these were simply the local political classes. In small societies with weak checks and balances, the effect was transformative. This money operated as a 'natural resources curse'. Since the money was not the result of taxation, domestic accountability for its spending was seen to be an unnecessary luxury.

This situation was made worse once the Eurozone was created. With the ECB looking away, Spain, Portugal, Ireland and Greece built not only asset bubbles with cheap and easy credit (which happened elsewhere) but also opaque and politically driven banking systems. As a result, cheap credit impeded reform and damaged institutions in all the countries of the periphery.

Membership in the Eurozone directed funds to wasteful investment, made cronyism exceptionally profitable, provided new incentives for political corruption and strengthened already existing hierarchies. If all the members of the Eurozone were equally strong, if they all had, for example, an outstanding and independent banking regulator, a powerful judiciary and strong internal mechanisms of accountability, perhaps these things would not have happened. Yet, they did happen.

The examples of the failed banks, Bankia in Spain, Allied Irish in Ireland, and Proton in Greece speak for themselves. In Greece, in particular, the EU has stood by while the political system has been undermined by a small group of oligarchs who have illegally occupied television frequencies for 25 years. By escaping any effective regulation and controlling news and commentary for their own purposes, they have dominated political and business life and undermined the credibility of the political class in its entirety. The bailout deal with the ECB, the International Monetary Fund and the European Commission has not touched their privileges.

In some of the members of the Eurozone the main legacy of the Euro is economic implosion, rising inequality and widespread corruption. This is not the result of isolated domestic failures. It is a result of collective European decision-making that misfired spectacularly throughout the periphery. The relentless pursuit of an 'ever closer union' made EU institutions neglect the question of the quality of this union. It is time to change course. Unless Europe addresses the deep unfairness at the heart of the Eurozone, the crisis is not going to end.

Pavlos Eleftheriadis is Associate Professor of Law and a Fellow of Mansfield College at Oxford University.

]]>http://fortune.com/2014/10/22/why-germany-is-the-eurozones-biggest-free-rider/feed/0454602180nt2192Former Treasury Secretary Geithner defends AIG bailout in courthttp://fortune.com/2014/10/07/former-treasury-secretary-geithner-defends-aig-bailout-in-court/
http://fortune.com/2014/10/07/former-treasury-secretary-geithner-defends-aig-bailout-in-court/#commentsTue, 07 Oct 2014 23:10:45 +0000http://fortune.com/?p=812750]]>(REUTERS) Former U.S. Treasury Secretary Timothy Geithner on Tuesday defended the government’s rescue of American International Group Inc in September 2008, saying it was necessary to prevent the country from plunging into a second Great Depression.

Geithner’s comments came in testimony in the trial of a lawsuit brought by Hank Greenberg, a major AIG shareholder until the bailout and the company’s chief executive until 2005. He contends the terms of the government $85 billion loan to AIG cheated its shareholders.

While few legal experts expect Greenberg’s lawsuit to be successful, it has served to reopen a fraught chapter in American economic history and the outcome could shape how regulators respond to future crises.

Greenberg’s lawyer, star litigator David Boies, spent much of Tuesday morning introducing emails Geithner wrote and received that discussed AIG’s deteriorating condition when he served as president of the New York Federal Reserve in the chaotic days around the initial bailout offer.

Many of the emails were sent by other New York Fed officials after midnight, underscoring the round-the-clock effort the government undertook to contain the 2008 financial crisis.

Boies has sought to portray the government as making ad hoc decisions that unfairly punished AIG and is arguing that the terms the New York Fed required as part of the bailout, including a nearly 80 percent stake in the company, were illegal.

Later on Tuesday, Geithner later testified that some of the terms, including the high interest rate, were in part based on a proposal from JPMorgan Chase & Co. and Goldman Sachs Group Inc, but he said he could not remember analyzing the basis for the interest rate. The proposal came from a term sheet for a possible private sector rescue, but that rescue never materialized.

The exchange grew testier as the afternoon wore on, as Boies tried to push Geithner to say the Fed had worked to avoid an AIG shareholder vote in connection with the rescue, or that regulators had failed to follow up on legitimate private sector efforts to help AIG. Geithner responded that he did not know about efforts related to shareholder votes and that he would have seriously considered any realistic proposals from private investors.

Greenberg through his Starr International Co, which was AIG’s largest shareholder with a 12 percent stake, sued in 2011 seeking more than $25 billion in damages.

Geithner took the stand on the seventh day of the trial, one day after his predecessor as Treasury secretary, Hank Paulson, told the same courtroom that AIG shareholders were singled out for punishment but that such terms were necessary to protect against others taking reckless risks.

On Tuesday, Boies spent time reading aloud comments Geithner made in a book he wrote about the 2008 financial crisis called “Stress Test,” focusing on the consequences AIG’s collapse could have on the broader financial system.

“It sounds like you are quoting me,” Geithner said on multiple occasions after hearing a passage from Boies, who cited the book with enough frequency that the judge overseeing the case asked if he should go get his own copy at Barnes & Noble .

The trial is unfolding before Judge Thomas Wheeler of the U.S. Court of Federal Claims in Washington, who will decide the case.

Geithner, who appeared relaxed but whose answers grew shorter and more deliberate later in the afternoon, did attempt to walk back some comments he had made in the past about the AIG bailout, including statements that the insurance company’s shareholders had been “effectively wiped out” and that the government had essentially “nationalized”AIG.

That was “not the most precise language,” he said, to laughter in the courtroom.

Geithner is expected to continue his testimony on Wednesday, when government lawyers will have an opportunity to question him.

]]>http://fortune.com/2014/10/07/former-treasury-secretary-geithner-defends-aig-bailout-in-court/feed/0Geithner speaks during an event in New Yorkvernekopy